Encore Capital Group, Inc. Prices Private Placement of Convertible Senior
SAN DIEGO, Nov. 21, 2012
SAN DIEGO, Nov. 21, 2012 /PRNewswire/ -- Encore Capital Group, Inc. (NASDAQ:
ECPG) (the "Company") yesterday priced $100,000,000 aggregate principal amount
of 3.00% convertible senior notes due 2017 (the "notes") to be sold to
qualified institutional buyers pursuant to Rule 144A under the Securities Act
of 1933, as amended. In connection with the offering, the Company has granted
the initial purchasers an option to purchase up to an additional $15,000,000
aggregate principal amount of such notes to cover sales in excess thereof.
The notes will be senior unsecured obligations of the Company. The notes will
bear interest at a rate of 3.00% per year payable semiannually in arrears on
May 27 and November 27 of each year, beginning on May 27, 2013.The notes
will be convertible, if certain conditions are met, into cash and, in certain
circumstances, shares of the Company's common stock, based on a
volume-weighted average price of the common stock on each day of an
observation period. The conversion rate for the notes will initially be
31.6832 shares per $1,000 principal amount, which is equivalent to an initial
conversion price of approximately $31.56 per share of common stock. The
initial conversion price of the notes represents a premium of approximately
25% to the $25.25 per share closing price of the Company's common stock on
November 20, 2012. The sale of the notes is expected to close on November 27,
2012, subject to customary closing conditions.
In connection with the pricing of the notes, the Company entered into
convertible note hedge transactions with certain financial institutions (the
"option counterparties"). The convertible note hedge transactions are
expected generally to reduce the potential dilution and/or offset the cash
payments the Company is required to make in excess of the principal amount
upon conversion of the notes in the event that the market price of the
Company's common stock is greater than the strike price of the convertible
note hedge transactions. The Company also entered into warrant transactions
with the option counterparties. The warrant transactions could separately have
a dilutive effect if the market price of the Company's common stock exceeds
the strike price of the warrant transactions, unless the Company elects,
subject to certain conditions, to settle the warrant transactions in cash. The
strike price of the warrant transactions will initially be $44.1875 per share,
which represents a premium of approximately 75% over the last reported sale
price of the Company's common stock on November 20, 2012, and is subject to
certain adjustments under the terms of the warrant transactions. If the
initial purchasers exercise their option to purchase additional notes, the
Company expects to enter into additional convertible note hedge transactions
and additional warrant transactions with the option counterparties.
The Company has been advised by the option counterparties that in connection
with establishing their initial hedge of the convertible note hedge
transactions and warrant transactions, the option counterparties or their
respective affiliates expect to enter into various derivative transactions
with respect to the Company's common stock and/or purchase shares of the
Company's common stock in privately negotiated transactions and/or open market
transactions after the pricing of the notes. This activity could increase (or
reduce the size of any decrease in) the market price of the Company's common
stock or the notes at that time. In addition, any repurchases by the Company
of its common stock from purchasers of the notes could affect the market price
of the common stock after the pricing of the notes.
In addition, the Company has been advised by the option counterparties that
the option counterparties or their respective affiliates may modify their
hedge positions by entering into or unwinding various derivative transactions
with respect to the Company's common stock and/or purchasing or selling the
Company's common stock in secondary market transactions following the pricing
of the notes and prior to the maturity of the notes (and are likely to do so
during any observation period related to a conversion of the notes). This
activity could also cause or avoid an increase or a decrease in the market
price of the Company's common stock or the notes, which could affect the
ability of noteholders to convert the notes and, to the extent the activity
occurs during any observation period related to a conversion of the notes, it
could affect the amount and value of the consideration that noteholders will
receive upon conversion of the notes.
The Company estimates that the net proceeds from the offering will be
approximately $96.5 million, after deducting the initial purchasers' discounts
and commissions and the estimated offering expenses payable by it. The
Company intends to use:
oapproximately $10.0 million of the net proceeds from this offering to pay
the cost of certain convertible note hedge transactions, taking into
account the proceeds to the Company of certain warrant transactions;
oapproximately $25 million of the net proceeds from this offering to
repurchase shares of the Company's common stock from purchasers of notes
in this offering in privately negotiated transactions concurrently with
oapproximately $61.5 million of the net proceeds from this offering to
repay borrowings under the Company's revolving credit facility; and
othe remainder of the net proceeds from this offering, if any, for general
If the initial purchasers exercise their option to purchase additional notes,
the Company may sell additional warrants. The Company intends to use the
resulting additional proceeds of the sale of the additional notes and any
oto pay the cost of entering into additional convertible note hedge
ofor general corporate purposes.
The notes, the shares of the Company's common stock issuable upon conversion
of the notes, if any, the convertible note hedge transactions and the warrant
transactions have not been and will not be registered under the Securities Act
of 1933, as amended (the "Securities Act") or the securities laws of any other
jurisdiction and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.
This press release is being issued pursuant to Rule 135c under the Securities
Act and does not constitute an offer to sell or the solicitation of an offer
to buy securities. Any offer of the securities will be made only by means of a
private offering memorandum.
The statements in this press release that are not historical facts, including,
most importantly, those statements preceded by, or that include, the words
"may," "believe," "projects," "expects," "anticipates" or the negation
thereof, or similar expressions, constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995
(the "Reform Act"). These statements may include, but are not limited to,
statements regarding the completion of the private offering and the
anticipated use of proceeds from the offering. For all "forward-looking
statements," the Company claims the protection of the safe harbor for
forward-looking statements contained in the Reform Act. Such forward-looking
statements involve risks, uncertainties and other factors which may cause
actual results, performance or achievements of the Company and its
subsidiaries to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements.
These risks, uncertainties and other factors are discussed in the reports
filed by the Company with the Securities and Exchange Commission, including
the most recent reports on Forms 10-K, 10-Q and 8-K, each as it may be amended
from time to time. The Company disclaims any intent or obligation to update
these forward-looking statements.
Encore Capital Group, Inc.
Paul Grinberg (858) 309-6904
Adam Sragovicz (858) 309-9509
Information found on the Company's website is not incorporated by reference.
SOURCE Encore Capital Group, Inc.
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